Retail Sales During Holiday Season Rise 5.5% Over Last Year

Posted onDecember 31, 2010|Comments Off on Retail Sales During Holiday Season Rise 5.5% Over Last Year

The spending resurgence is led by strong online sales, SpendingPulse says. Shoppers say they loosened the purse strings because of pent-up demand and because they feel better about the economy.

A holiday spending resurgence led by strong online sales gave U.S. retailers a much-needed boost and helped improve the nation’s economic outlook heading into the new year.

Retail sales from Nov. 5 through Dec. 24 rose 5.5% to $584.3 billion over the same period last year, according to MasterCard Advisors’ SpendingPulse. The figures, which exclude auto sales, are ahead of industrywide projections for a 3.3% to 4% rise for the Christmas season and are the best since before the recession.

“The numbers verify what people have been talking about: a positive season and a good step forward,” said Michael McNamara, vice president for research and analysis at SpendingPulse, which estimates sales for all forms of payment. “Consumer confidence is a bit more improved as there has been stability in the system.”

Although the U.S. unemployment rate remains high, “when we see these good demand numbers come into play, I think that puts the country in a better position to start hiring more broadly,” McNamara said.

Online sales posted a 15.4% year-over-year increase, with six days during the holidays registering more than $1 billion in sales online, up from three days in 2009. As shoppers have become more comfortable buying on the Internet, retailers have become increasingly savvy about using their websites to roll out deals earlier and offer more perks such as free shipping.

Shoppers continued to storm online on the day after Christmas, with sales up nearly 11% over Dec. 26 last year, according to data by IBM Coremetrics. The average order value was $175.59, up nearly 12%. Still, retail analysts note that online sales account for only about 8% to 10% of total retail sales.

After cutting back during the recession, many shoppers said they loosened the purse strings this holiday season because of pent-up demand and because they felt better about the economy.

Confident that her job as director of sales at a Cypress hotel was secure, Sally Brayton, 62, shopped steadily throughout the season, hitting up midnight madness events on Black Friday, buying online and shopping at several traditional shopping centers instead of at outlet malls.

“I was one of those that spent a lot of money on Christmas this year, more than the last two,” said the Lakewood resident, whose purchases included clothes, silver jewelry, a PlayStation 3 and games. “People were actually walking around with bags in their hands — not just looking.”

Apparel sales rose 11.2% during the holiday season, led by robust purchases of youth clothing, SpendingPulse said. The category was helped by cold weather across most of the country that pushed up purchases of higher-priced winter gear including sweaters, McNamara said.

Jewelry, another strong category this season as consumers splurged on discretionary purchases, posted an 8.4% increase. Excluding jewelry, luxury sales increased 6.7% thanks to the stock market rally and pent-up demand among the well-heeled.

Weaker categories included furniture and home furnishings, which saw a 1.6% increase, and electronics, which posted a 1.2% gain.

McNamara said the relative softness in the electronics sector was in part because of significant drops in television prices compared with a year ago. “When you have a large, important category like TVs showing 10% to 15% price declines, you need to sell a lot more to break even,” he said.

SpendingPulse is one of several groups that will release holiday season retail figures in the coming weeks. Major chain stores including Macy’s Inc., Target Corp., Gap Inc. and Nordstrom Inc. are expected to report their December sales results Jan. 6.

Although the bulk of the season is over, retailers are still hoping for strong sales this week, traditionally a busy time for buying as shoppers redeem gift cards, exchange unwanted gifts and check out the after-Christmas sales. Many stores are rolling out new discounts now in hope of keeping the momentum going.

Some industry experts worried that the powerful East Coast blizzard would severely reduce sales, with Marshal Cohen, chief industry analyst at NPD Group predicting that the day after Christmas — usually a huge sales day — would be especially weak.

“This year it was poised to be one of the top six days of retail,” he said. “I don’t think that is the case any longer.”

Even after spending heavily during the holidays, Brayton, the Lakewood resident, said she was still shopping and planned to visit Westminster Mall on Monday after going to South Coast Plaza on Sunday.

“I’m shopping a lot for myself and for my house now — things that I need: sheets, throw rugs,” she said. “I didn’t spend as much last year or the year before, but I’m back on track.”